PILIPINAS Shell Petroleum Corp. (PSPC) reported a net loss of P5.5 billion in the first quarter of the year due to the effects of the collapse in global oil prices and the economic slowdown due to the quarantine measures related to the new coronavirus disease 2019.
“Our first quarter loss is disappointing given our robust overall performance last year and the strong marketing delivery from the start of 2020 up until mid-March. We will overcome this challenge the same way we surmounted the various crises and upheavals during our 106-year legacy in the Philippines. We have taken prompt action to reinforce the financial strength and resilience of our business, leveraging on the flexibility of our supply chain and prudent balance sheet management over the past years,” said Cesar Romero, PSPC president and chief executive officer.
PSPC is implementing cash conservation measures and aggressive working capital management in response to the current decline in demand.
It said from P500 million in operating expense savings announced in March, the management team has doubled the target savings to P1 billion from various cash preservation initiatives.
The company’s planned capital expenditure for the year is also reduced by 25 percent which translates to over P1 billion.
PSPC is cancelling discretionary performance-related bonuses of employees.
PSPC cited another factor that contributed to the net loss for the quarter is the inventory holding losses of P5.6 billion as crude oil price sank from $67 per barrel during the start of the year to $26 per barrel by end of March.
“The industry is in a crisis of uncertainty and multiple variables are at play. While we cannot predict what will happen, we are embracing the current reality and embedding our plans to thrive in this crisis. We have recovery strategies in place across all our businesses. We will continue to make the hard decisions to protect cash flow and liquidity through cash preservation and generation measures and enhance financial resilience by further strengthening our balance sheet,” Romero said.
PSPC’s refinery in Batangas is on a month-long shutdown.
PSPC currently has a retail network of 1,126 sites in key locations. It has a market share of 17.93 percent.
